Forget Nvidia. If you want a real stock performer, look no further than Regencell Bioscience.
Driving the news: Shares of Regencell — a Nasdaq-listed, Hong Kong-based firm purportedly working on herbal medicinal treatments for ADHD and autism spectrum disorder — surged by over 55,000% as of Tuesday’s close, despite having never generated revenue.
- The company’s market cap, which was at US$53 million a year ago, is now ~$30 billion. On paper, it’s more valuable than the likes of Nippon Steel or DraftKings.
- It should be noted that, at this point in time, the company is still in an R&D phase, with no timeline for products, even claiming in a filing that it may never be profitable.
Why it’s happening: Your guess is as good as ours! While analysts have pointed to a stock split on Monday generating recent activity, the fact is that the company has made no major announcements this year that would logically create such seismic investor interest.
- Another potential explanation is that investors are bullish on alternative medicines, especially with vaccine skeptic Robert F. Kennedy Jr. changing U.S. health policy.
Zoom out: This is reminiscent of a situation in 2022 when a Hong Kong-based tech firm called AMTD Digital became a meme stock after shares inexplicably surged by ~21,000% following its IPO before crashing. AMTD was, as one venerable short-seller put it, “sketchy.”
Bottom line: Regencell appears to fall under the sketchy category as well, with ~86% of its stock owned by the CEO. Now that it’s gotten more scrutiny, shares are already falling. We’ll see how things shake out, but let it be a reminder to play safe with meme stocks.—QH